Simple Summary
Grant 60,000,000 DRV to the Lyra Foundation in order to continue supporting the growth of the Derive Ecosystem.
Abstract
Grant 60,000,000 DRV to the Lyra Foundation in order to continue promoting the Derive Ecosystem.
Specification
We propose that of the 60,000,000 DRV be granted to the Foundation with the following conditions:
- 10,000,000 with a 3 month cliff
- 50,000,000 is locked with 1 year cliff + 1 year linear vest
Note that we do not anticipate any immediate need for this DRV to be sold on market or used for runway, the 10,000,000 unlocked portion may be needed in case of specific, short term strategic deals that may arise, and the remaining 40,000,000 will have a minimum lock of a 1 year cliff + 1 year linear vest. This locked DRV will likely be used for longer term deals for contractors (e.g. 4 year vests for core contributors) and/or strategic partners. Large, long term deals promote long term alignment - and allow Derive to secure and retain the top quality talent required to build first-rate products.
The key goal that the Foundation will work to achieve this year is ensuring that fees generated by the protocol are larger than emissions, and that overall protocol fees generated grow to more than $30,000,000 per year. This requires a 7x in revenues without a corresponding increase in emissions. Trading emissions as of writing - 20th of February 2025 - are at a rate of 52,000,000 DRV per year, and staking emissions are at 12,000,000 DRV per year. At present, the total unissued DAO Treasury DRV is roughly 250,000,000 DRV, so this would leave 190,000,000 for future emissions, plus any additional buybacks in the future.
Grants History and Burn Transparency
The Lyra Foundation received 100,000,000 LYRA tokens and $1,500,000 USDC in August 2023 [LRFC] Introduce Lyra V2 and Establish Lyra Foundation
The Lyra Foundation received 50,000,000 LYRA and 208,184.5 USDC in April 2024 [LRFC] Lyra Foundation Grant Renewal
The Lyra Foundation received $300,000 USDC in October 2024 [DIP] Grant the Lyra Foundation further funding
This totals to:
150,000,000 LYRA (now DRV) and 2,008,184.5 USDC
The Derive Foundation allocates USDC to core contributors and service providers who help develop the protocol and run crucial infrastructure. The burn from these contractors and contributors in 2024 was approximately:
- $1,650,000 USDC, expected to rise 20-25% in 2025 with new contracts
- 50,000,000 DRV sent to Ethena in return for a strategic investment. 20,000,000 of these tokens were unlocked on TGE, the remaining 30,000,000 vest linearly for 1 year post TGE. Other terms are not currently disclosable.
- 30,000,000 DRV loaned to liquidity service providers
- 41,500,000 for core contributor and advisor contracts, the majority structured with vesting past 2027, and extending out to 2029.
- 20,000,000 sold to strategic partners and investors over 18 months, these vests continue for a year post TGE, but over ~50% of these are already fully vested
- 3,000,000 allocated for early options/perps liquidity providers
This totals to 144,500,000 DRV out of 150,000,000 granted (5,500,000 remaining).
Rationale
The Lyra Foundation has worked with service providers and contractors to help steward the protocol, chain and product to $12.5 billion in volume and $4,500,000 in fees generated by the protocol since launch in January 2024. A portion of these fees are now being directed towards DRV buybacks. Derive has secured flagship partnerships with Ethena, EtherFi, Lombard, Swell, and other leading protocols in DeFi, building a brand and reputation for scaled and high performance onchain derivatives.
The Foundation has put the Derive protocol and chain in a strong position to capture anticipated market growth in 2025 with multiple catalysts including increased onchain adoption by institutions and retail, an improved global regulatory outlook, and the expected proliferation of institutional grade assets onchain (including RWAs).
The protocol and chain now have sufficient scale to meet institutional grade demand, and in 2025 and 2026, securing distribution is a top priority. In order to move with the requisite speed to capture fleeting opportunities, as well as to continue incentivising service provider and contract work with a long term outlook, the Foundation is requesting a significant budget for maximum flexibility during this high leverage period.
Here’s where we expect to allocate the grant, and the timelines for tokens granted to be unlocked, should it be approved:
- 30,000,000 incentivization for core contributors
- Continued core contributor incentivization, with minimum unlocks of 1 year cliff + 1 year linear vests, and longer locks and re-locks required for total DRV packages of >2,000,000 (if any).
- 15,000,000 for strategic partnerships
- Liquidity, institutional partners for entry into new markets
- 15,000,000: miscellaneous - can be freely allocated in the future to strategic deals or core contributor/advisor hires.
Test Cases
N/A